Tuesday, January 4, 2011

Ally, Bank fees and Cat fund, OSAP

Yesterday I got a call from Ally for a status update on my account. It turns out that they have disqualified my cheque because I did not write out "five cents." So they decided the the dollar amount was different form the numerical number on the cheque. For 5 cents I have spent the last 3 months trying to send them money. The first time I had an issue I called them and asked very specifically how they wanted the check written out and I was told that I had written it correctly. Clearly I have been lied to. So I have decided to cancel my account. Let me explain why:

1) the reason that I opened the account was for the wrong reason.

Explanation: when I decided on my 10% fund it was to replace the fact that I had not signed up for the Defined Contribution retirement option at work. So this money was to be invested into retirement plans of some sort. However I have moved the money around for my car fund last month and then decided to convert it to a down payment fund for a house. This is why I opened up the Ally account. The major reason for this is that I had no idea how to invest for retirement. But I have been reading lots of books on the topic and I decided how I will plan for my retirement. As a result there is no need for this fund and I would have been using the money for the wrong reasons. As much as I really really want my own place until my debt has been reduced there is not a hope in hell of that happening.

On December 31 my bank took money out of my account for bank fees $9.95. I am not all that happy about that but I agreed to it so say-lave.

I had to get more cat medication $64.43 today. This brings my cat fund down to $39.91. I booked the cats, both of them in for vet aptms in April. This will be around $150 each plus $30 for stool sample testing. God willing I hope to have enough money to cover this from my cat fund but at the rate I am going through it, who knows. Sigh.

My first of many letters form OSAP came in today. Over the last 6 months of 'free period' from Sept. 1 -Feb 1 I will have accumulated $308.46 of interest. This can be paid in a lump sum with my first payment or it can be added to my overall total. Ideally I would rather pay it upfront but given that it is due at the end of February I do not think I will be able to do that. As such I opted to add it to my overall student debt balance. In September I put in lump sum amount of $3,000 which was summer OSAP I had left over. This brings my overall OSAP down to $10, 410.46 (including the $308.46). This amount of money is stretched out over a 114 month repayment period. My monthly payments to OSAP starting in February will be $117.45.

It would would be ideal to be able to put pay more them the min. monthly payment. And this is my over all goal. But I have decided that my goal of $15,000 debt reduction will be focused on my line of credit. For 2 reasons: 1) when the first real payment comes through I will be paying interest + principle and if I don't focus on bring the principle down the payment will be painfully high. 2) I get a tax credit for the interest in my OSAP which for now I will need to bring my into a lower tax bracket to max my income return. I can make lump payments to OSAP at any time so when I have my TD line at a manageable amount I will increase my payments to OSAP.

I posted on this earlier but I think I did it wrong because it hasn't shown up. I just wanted to point out that as far as I know, the interest you pay on OSAP is a credit, not a deduction. It reduces your tax payable if you owe taxes, but doesn't reduce your taxable income.